"The movie industry is suffering from a loss of some $3.5 billion annually from hard-goods piracy (DVD, VCD, videotape)," said
Jack Valenti, president of the Motion Picture Association of America (MPAA), and the problem of digital piracy is far more menacing. Valenti estimates that some 400,000 to 600,000 films are being pirated over the Internet each day. Speaking before the Senate Commerce, Science and Transportation Committee, Valenti called on the FCC to develop technical mandates to create a "safe environment" for digital content. The MPAA is a pushing "Broadcast Flag" mandate to stop digital over-the-air broadcasts from being re-directed to the Internet.
The digital content protection scheme proposed by the MPAA won't work, would hurt consumers, and would impede innovation by consumer electronics makers, said
Lawrence J. Blanford, president and CEO of Philips Consumer Electronics. Blanford said the MPAA proposal, which would require that all devices recognize a data bit in their digital TV signal and encrypt content using only industry authorized algorithms, would fail to stop the unauthorized redistribution of digital broadcast content over the Internet. The plan would also require consumers to replace (and the FCC to regulate) "virtually every single device in the home network." It would impinge on "fair use" provisions of copyright law, and, Blanford argued, it would give a small group companies the power to restrain competition in new digital consumer electronics. Philips is endorsing Digital Broadcast Content Protection legistlation introduced by Senator Brownback (R-KS), which would use "watermarks" rather than encryption to identify and protect digital content.
By May 2003, over 230.3 million copies of the KaZaA file sharing software had been downloaded worldwide, said
Cary Sherman, president and General Counsel of the Recording Industry Association of America (RIAA). Sherman contends that music downloading is driving the DSL business in the U.S., particulary for Verizon and SBC In congressional testimony Sherman cited estimates that 50% to 70% of the capacity on cable broadband networks is being consumed by peer-to-peer traffic, up from 20% to 30% a year ago. Sherman also accused Verizon of actively encouraging its DSL subscribers to visit unauthorized P2P services and said the major DSL providers lacked the "economic incentives" to combat piracy.
Verizon recognizes the legitimate interests of copyright owners and has strict policies about online piracy, but it does not believe that the protection of intellectual property should be the burden of Internet Service Providers, said
William Barr, Executive VP and General Counsel for Verizon Communications. In particular, Verizon objects to the recent district court ruling that grants copyright holders or their agents the right to discover the name, address, and telephone number of any Internet user they accuse of piracy without filing a lawsuit or making any substantive showing at all to a federal judge. Verizon said this subpoena power, which is currently being applied to music recording, might later be extended to any other type of digital file, including email, news group postings, digital photographs, etc. Barr warned that a whole industry of copyright "bounty hunters" is springing up, led by economic incentives to intrude into private lives and threaten vigilante justice whenever they suspect a copyright infringement. Verizon aso commended Senator Brownback's proposed Digital Consumer Internet Privacy Protection Act, especially for provisions to ensure that subpoenas cannot be issued without sufficient judicial safeguards in place.
SBC is being besieged by the music industry with thousands of subpoenas to identify Internet users, agreed
James D. Ellis, Senior Executive VP and General Counsel for SBC Communications. Ellis noted that peer-to-peer networks did not commonly exist in 1998 when Digital Millennium Copyright Act was passed. He argues that the unsupervised private right of subpoena currently being used by the recording industry strips Internet users of their First Amendment rights to communicate and publish anonymously -- without due process of law.http://commerce.senate.gov/hearings/witnesslist.cfm?id=919
- The MPAA's "Broadcast Flag," which was created by the Advanced Television Systems Committee (ATSC), is a sequence of digital bits embedded in a television program that signals that the program must be protected from unauthorized redistribution.
